THE NEW YORKER, SEPTEMBER 7, 2015
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In the 2000-01 academic year, Amer-
ican colleges awarded almost 1.3 mil-
lion bachelor's degrees. A decade later,
the figure had jumped nearly forty per
cent, to more than 1.7 million. About
seventy per cent of all high-school grad-
uates now go on to college, and half
of all Americans between the ages of
twenty-five and thirty-four have a col-
lege degree.That's a big change. In 1980,
only one in six Americans twenty-five
and older were college graduates. Fifty
years ago, it was fewer than one in
ten. To cater to all the new students,
colleges keep expanding and adding
courses, many of them vocationally in-
clined. At Kansas State, undergradu-
ates can major in Bakery Science and
Management or Wildlife and Outdoor
Enterprise Management. They can
minor in Unmanned Aircraft Systems
or Pet Food Science. Oklahoma State
o ers a degree in Fire Protection and
Safety Engineering and Technology.
At Utica College, you can major in
Economic Crime Detection.
In the fast-growing for-profit college
sector, which now accounts for more
than ten per cent of all students, voca-
tional degrees are the norm. DeVry Uni-
versity---which last year taught more
than sixty thousand students, at more
than seventy-five campuses---o ers ma-
jors in everything from multimedia de-
sign and development to health-care
administration. On its Web site, DeVry
boasts, "In 2013, 90% of DeVry Univer-
sity associate and bachelor's degree grads
actively seeking employment had careers
in their field within six months of grad-
uation." That sounds impressive---until
you notice that the figure includes those
graduates who had jobs in their field
before graduation. (Many DeVry stu-
dents are working adults who attend col-
lege part-time to further their careers.)
Nor is the phrase "in their field" clearly
defined. "Would you be okay rolling
the dice on a degree in communications
based on information like that?" Cap-
pelli writes. He notes that research by
the nonprofit National Association of
Colleges and Employers found that, in
the same year, just 6.5 per cent of grad-
uates with communications degrees were
o ered jobs in the field. It may be un-
fair to single out DeVry, which is one
of the more reputable for-profit educa-
tion providers. But the example illus-
trates Cappelli's larger point: many of
the claims that are made about higher
education don't stand up to scrutiny.
"It is certainly true that college has
been life changing for most people
and a tremendous financial investment
for many of them," Cappelli writes. "It
is also true that for some people, it has
been financially crippling. . . .The world
of college education is di erent now than
it was a generation ago, when many of
the people driving policy decisions on
education went to college, and the the-
oretical ideas about why college should
pay o do not comport well with the
reality."
No idea has had more influence on
education policy than the notion that
colleges teach their students specific,
marketable skills, which they can use
to get a good job. Economists refer to
this as the "human capital" theory of
education, and for the past twenty or
thirty years it has gone largely unchal-
lenged. If you've completed a two-year
associate's degree, you've got more
"human capital" than a high-school
graduate. And if you've completed a
four-year bachelor's degree you've got
more "human capital" than someone
who attended a community college.
Once you enter the labor market, the
theory says, you will be rewarded with
a better job, brighter career prospects,
and higher wages.
There's no doubt that college grad-
uates earn more money, on average, than
people who don't have a degree. And for
many years the so-called "college wage
premium" grew. In 1970, according to a
recent study by researchers at the Fed-
eral Reserve Bank of New York, people
with a bachelor's degree earned about
sixty thousand dollars a year, on aver-
age, and people with a high-school di-
ploma earned about forty-five thousand
dollars. Thirty-five years later, in 2005,
the average earnings of college gradu-
ates had risen to more than seventy thou-
sand dollars, while high-school gradu-
ates had seen their earnings fall slightly.
(All these figures are inflation-adjusted.)
The fact that the college wage premium
went up at a time when the supply of
graduates was expanding significantly
seemed to confirm the Goldin-Katz
theory that technological change was
creating an ever-increasing demand
for workers with a lot of human capital.
During the past decade or so, how-
ever, a number of things have happened
that don't easily mesh with that theory.
If college graduates remain in short sup-
ply, their wages should still be rising.
But they aren't. In 2001, according to
the Employment Policy Institute, a lib-
eral think tank in Washington, workers
with undergraduate degrees (but not
graduate degrees) earned, on average,
$30.05 an hour; last year, they earned
$29.55 an hour. Other sources show even
more dramatic falls. "Between 2001 and
2013, the average wage of workers with
a bachelor's degree declined 10.3 percent,
and the average wage of those with an
associate's degree declined 11.1 percent,"
the New York Fed reported in its study.
Wages have been falling most steeply of
all among newly minted college gradu-
ates. And jobless rates have been rising.
In 2007, 5.5 per cent of college gradu-
ates under the age of twenty-five were
out of work. Today, the figure is close to
nine per cent. If getting a bachelor's de-
gree is meant to guarantee entry to an
arena in which jobs are plentiful and
wages rise steadily, the education system
has been failing for some time.
And, while college graduates are still
doing a lot better than nongraduates,
some studies show that the earnings gap
has stopped growing. The figures need
careful parsing. If you lump college grad-
uates in with people with advanced de-
grees, the picture looks brighter. But al-
most all the recent gains have gone to
folks with graduate degrees. "The four-
year-degree premium has remained flat
over the past decade," the Federal Re-
serve Bank of Cleveland reported. And
one of the main reasons it went up in
the first place wasn't that college grad-
uates were enjoying significantly higher
wages. It was that the earnings of non-
graduates were falling.
Many students and their families
extend themselves to pay for a college
education out of fear of falling into the
low-wage economy.That's perfectly un-
derstandable. But how sound an invest-
ment is it? One way to figure this out is
to treat a college degree like a stock or
a bond and compare the cost of obtain-
ing one with the accumulated returns
that it generates over the years. (In this
case, the returns come in the form of
wages over and above those earned by